singapore property weekly issue 36
TRANSCRIPT
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CONTENTS
p2 Singapore Property News This Week
p9 Property Prices at a Turning Point
p14Resale Property Transactions
(January 7 January 13)
Welcome to the 36th edition
of the Singapore Property
Weekly.
Hope you like it!
Mr. Propwise
FROM THE
EDITOR
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Singapore Property This Week
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ResidentialStrong sales at Watertown project in
Punggol
215 of the 596 released units at 99-year
leasehold 992-unit Watertown project was
sold over the Chinese New Year longweekend, bringing the total number of units
sold to slightly above 500. The units sold so
far have a price range of $980 to $1,500 psf
and was sold mainly to locals, with
Singaporeans making up 90% of the buyers.
The mixed residential-and-retail project willinclude 11 13- to 14-storey towers as the
residential component and a four-storey retail
component connected to the Punggol MRT
station. The latter, named Waterway Point, willconsist of two basement levels and two other
levels that make up 370,000 sq ft worth of net
lettable area with a 40-30-15-15 tenant mix for
retail, food and beverage, entertainment and
others such as educational institutions, banks
and community amenities.Evidence that ABSD is achieving its
intended effect
Sales figures for recently launched projects
have shown that the ABSD is achieving its
intended effect of curbing foreign demand. In
the recently launched Watertown project in
Punggol, over 90% of the units sold were
purchased by Singaporeans, up from an
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average of 80% of similarly suburban condos
sold in 2011, such as The Tennery and The
Greenwich. In another recent launch, The
Hillier in Hillview area, 80% of the buyerswere Singaporeans. The higher proportion of
non-Singaporean buyers may be due to the
location, which offers easy access to Bukit
Timah and better-known schools such as
Nanyang Girls School and Hwa Chong
Institution.
An upcoming slew of property launches
There are several property launches to look
out for, including ECs and private condos.
99-year leasehold five-storey Parc Rosewood
located in Woodlands, a private residential
project consisting of 689 units has been
launched. The units are likely to go for an
average price of $1,000 psf, with one-
bedroom units starting from 431 sq ft priced
at around $400,000, two-bedroom units at
$570,000 and the rarer three-bedroom unitsfor almost $800,000.
The Tampines Trilliant, an EC project
developed by Sim Lian, is set to be released
soon. The project will consist of 670 units in
12 15- and 16-storey towers, with mostly
three-bedroom or three-bedroom-plus-utility
units with 127 units of the first ranging from
872 to 1,141 sq ft and 397 units of the latter
with a size of 1,001-1,378 sq ft. Other units
will either be four-bedroom units ranging from
1,302-1,593 sq ft or penthouses.Another upcoming EC is 728-unit Twin
Waterfalls located near Punggol MRT which
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will be launched in February. Developed by
Fraser Centrepoint, the project consists of 17-
storey towers housing 914 sq ft three-
bedroom units, 1,378 sq ft four-bedroom dualkey units and penthouses with sizes up to
1,928 sq ft, with an estimated average price
of around $700 psf.
Another project under Fraser Centrepoint due
for release soon, either within Q1 or early Q2,
is the 99-year leasehold seven-storey Palm
Isles at Flora Drive in the Upper Changi area,
which will consist of 450 units to be sold at an
estimated price of $900-950 psf.
Other upcoming projects include 103-year
leasehold 62-unit Greenwood Mews, a clusterhousing development located near Bukit
Timah, and 99-year leasehold 416-unit Hillsta,
a condominium development in Choa Chu
Kang as well as 99-year leasehold 702-unit
Bartley Residences, a condominium project
located near Bartley MRT Station.
Sim Lian launches 99-year leasehold EC
The Tampines Trilliant
The 670-unit development sits a 236,805 sq ft
site located along Tampines Central 7, and
will consist of 12 blocks housing 127 three-
bedroom units ranging from 872 sq ft to 1,141sq ft, and 397 three-bedroom-plus-utility units
with sizes of 1,001-1,378 sq ft, with the rest
being four-bedroom units ranging from 1,302-
1,593 sq ft and penthouses of sizes 1,841 -
2,465 sq ft. Prices start from $682,000 or
$782 psf for a 872 sq ft three-bedroom unitand $971,000 or $746 psf for a 1,302 sq ft
four-bedroom unit. Being located near
Tampines MRT Station and shopping malls
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such as Tampines 1, Tampines Mall and
Century Square, it is expected to draw much
interest.
Lower COVs indicating a weaker HDBresale market
Q4 2011 showed lower cash-over-valuation
(COV) figures, with the median COVs falling
for all flats except for five-room and executive
flats in some towns. This shows that the HDB
resale market is weakening. This decrease
can be attributed to buyers being more
conscious of the additional costs required to
renovate resale HDB flats, particularly in light
of the negative economic outlook.
The large supply of build-to-order (BTO) flatshave also helped to stabilise HDB resale
prices, which increased by 1.7% from Q3 to
Q4, compared to 3.8% from Q2 to Q3. The
median resale prices have also decreased for
mainly four-room and five-room flats in more
mature estates such as Bukit Merah. While
prices of resale flats in other estates have
continued to increase, they may fall as supply
of new fats increases. Other possible reasons
for the potential fall in prices is the relative
attractiveness of the BTO flats, which are
affordable and now afford a high rate of
success and shorter waiting time.Resale volumes have also fallen, for in Q4
2011, resale transactions increased by 0.3%
from Q3, and brought the total transactions
for the year to 24,633, a 24% decrease from
2010s figures.
Generally, COVs are expected to fall to
around $25,000-40,000 and sale transactions
are expected to fall by 3-5%.
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Prices and rents for private properties
stagnate
According to data released by URA, Q4 2011
saw a 0.2% increase from Q3s benchmarkprivate home price index and 5.9% year-on-
year increase from 2010 to 2011, lower than
the 17.6% increment from 2009 to 2010. The
landed property sub-index increased by a
mere 0.1% from Q3 to Q4 with the price index
for semi-detached houses falling by 0.6%,
when the non-landed property sub-index
increased by 0.3%. Nevertheless, the
differential price fall for semi-detached
houses in different regions (some 1.6%, some
1.3%) showed that there is price resistance in
some regions.
For the overall rental index for private homes,
it registered a 0.4% q-on-q increase from Q3
to Q4, lower than the 0.8% increase from Q2
to Q3. Similar to the trend for the price index,
the rental index increment for 2011 was also
much smaller than that for 2010, 3.8%
compared to the earlier 17.9%.
Some analysts believes that prices will fall by
5-15%, with the luxury sector taking the brunt
of it and the mass-market sector less
affected, particularly with the ABSD and the
uncertain economic outlook to curb demand.
Other analysts however, believe that it is hard
to conclude whether the peak has been
reached. This is because there are many
large developers who are able to resist price
cuts. Furthermore, earlier cooling measures
implemented in the last couple of years did
not manage to cool the market, making it
hard to predict and conclude whether prices
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will fall Some believe that while the ABSD will
lead to a price fall, prices are just as likely to
increase again as interest rates are expected
to remain low.
The much lower sales volume in the
secondary market (decrease of 27.6% in
2011) compared to that in the primary market
(a fall of 2.4%) could also worsen the price
decrease. The latter is more attractive tobuyers because of the showflats and
advertisements by developers and installment
payment plans buyers can choose, not an
option when purchasing property in the
secondary market. The increase in the supply
of ECs has also hampered the growth of
rental rates.
Commercial
Industrial rents to decrease as supply
booms
After reaching the peak of its growth in 2011,
where multi-user and warehouse price and
rental indices have increased by 16% and
22% respectively, growth of industrial rents
and capital values may slow down or even fall
this year, with an upcoming supply of 9.59
million sq ft worth of industrial space. This is
not helped by the negative economic outlook
for the year, which would further discourage
demand for industrial spaces. A fall of 15% is
predicted as demand for both existing andupcoming spaces decreases.
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With more land expected to be released
under the Industrial Government Land Sales
Programme (IGLS), some with shorter
tenures, the situation is not expected toimprove. New conditions such as restrictions
on strata subdivision on selected plots of land
will further discourage higher bid prices.
However, capital values may not be affected
as much since the recent cooling measures in
the residential market may result in investors
turning their attention to the industrial market,
particularly to multi-user factory space and
high-specs buildings.
Singapore takes the 6th spot in JLLs Top
30 list for commercial property investment
In Jones Lang LaSalle's list of top 30 cities for
direct commercial real estate investment for
2010 to Q3 2011, Singapore takes the sixth
spot, having about US$15 billion worth of
such transactions in this period. Direct
commercial real estate investment includes
office, retail, industrial, hotel and mixed-used
properties but excludes land deals, residential
properties and all transactions below US$5
million.
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Property Prices at a Turning Point
By Mr. Propwise
From the URAs recent release of the 4Q2011
private residential property index, property
price increases in Singapore have almost
screeched to a halt. Prices were up just 0.2%
in 4Q2011 on a quarter-on-quarter basis and
5.9% on a year-on-year basis.
At the current levels the price index is 16.2%
above the previous 2Q2008 peak, and 13.7%
above the previous all time high in 2Q1996. Figure 1 URA Property Price Index
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What is interesting to note is that the rateof
growth of the PPI has been slowing for 9
quarters, i.e. property price growth has been
decelerating continuously, and is already
close to zero. This is likely due to concern
over the slowing economy, worrying global
economic situation especially with the
troubles in Europe and weak growth in the
US, combined with the dampening effect of
multiple rounds of government measures.
Figure 2 Change in Property Price Index
I believe that residential property prices in
Singapore are at a turning point and we are
likely to see a quarter-on-quarter decline in
the next 1Q2012 Property Price Index
disclosure. Some analysts have estimated
that prices were already down on a month-
on-month basis in December 2011.
The uncertainty is whether we will see a
sharp decline as during the 1997-1998 Asian
Crisis and 2008-2009 Financial Crisis, or
whether it will be a more gradual decline as
we saw during the 2000-2004 Post-Dotcom
Bubble and SARs era.
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Can Low Interest Rates Prop Up Property
Prices?
However some believe that the abundant
global liquidity situation could blunt or even
reverse the decline in Singapore property
prices. Led by the European Central Bank
and Fed, governments around the world have
been easing monetary policy and keeping
interest rates low to prevent another crisis
triggered by too much debt.
Figure 3 Straits Times Index
Weve already seen a New Year rally in the
Straits Times Index, and if you believe that
the stock market is a leading indicator for the
property market, then we could see property
prices supported in the coming quarters.
Anecdotally, mass market launches are still
going strong and local investors appetite for
property is still strong even as the Additional
Buyers Stamp Duty has kept most of the
foreigners away. For example, the recentlaunch of Parc Rosewood (by Fragrance
Group and World Class Land) in Woodlands
saw 165 of the 236 launched units sold at the
$925-998 psf price range, 8-10% lower than
initially guided. This followed the strong take
up of Watertown in Punggol.
But dont forget that this decelerating price
growth trend preceded the property bear
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markets that began in 3Q2000 and 3Q2008
(but not the one in 3Q1996). So regardless of
whether you are more a technical or
fundamental investor (or both), it pays to be
cautious in this market.
Supply in the Pipeline is at a Record High
Supply, at 77,089 uncompleted private
residential units from projects in the pipeline,
is at an all-time high since the URA started
recording this data in 1999. At the same time
volumes are falling 4Q2011 sales of 3,603
new units (down 15% quarter-on-quarter) and
2,962 units (down 24% quarter-on-quarter)
are both significant decreases.
Of this record supply, 39,184 units remainunsold as at 4Q2011 this could present an
overhang on the market for many quarters to
come.
Weve also seen widespread declines or Cash
Over Valuations in the HDB market, which is a
foreshadowing of a weaker private propertymarket.
How Much Could the Market Fall?
I did a study of the previous 3 property market
corrections and found that the PPI corrected
in the range of 19.9% to 44.9% and that thecorrection lasted from 4 to 15 quarters:
2Q1996 Peak to 4Q2008 Trough 44.9%
decline over 10 quarters
2Q2000 Peak to 1Q2004 Trough 19.9%
decline over 15 quarters
2Q2008 Peak to 2Q2009 Trough 24.9%
decline over 4 quarters
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If history is anything to go by, what this
means is that the correction could be longer
and stronger than what most people are
expecting. However, I believe that we willonly see similar levels of price declines if
there is an external crisis to cause a sense of
panic, which we had in each of the previous 3
declines (e.g. Asian Crisis, Dotcom Bubble,
Global Financial Crisis).
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Non-Landed Residential Resale PropertyTransactions for the Week of Jan 7 Jan 13
NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore Land Authority.Typically, caveats are lodged at least 2-3 weeks after a purchasersigns an OTP, hence the lagged nature of the data.
Postal
DistrictProject Name
Area
(sqft)
Transacted
Price ($)
Price
($ psf)Tenure
15 ONE AMBER 1,270 1,644,650 1,295 FH
16 COSTA DEL SOL 1,475 2,060,000 1,397 99
21 MEADOWLODGE 1,335 1,323,000 991 99
19 PARRY COURT 1,098 848,000 772 999
19 PEOPLE'S GARDEN 1,195 941,888 788 999
15 WATER PLACE 1,216 1,267,000 1,042 99
9 RIVERGATE 1,507 2,789,800 1,851 FH
3 THE ANCHORAGE 1,604 1,680,000 1,047 FH
19 THE SUNNYDALE 1,216 875,000 719 99
15 BLU CORAL 2,110 1,650,000 782 FH17 CARISSA PARK CONDOMINIUM 1,324 1,050,000 793 FH
23 THE MADEIRA 1,249 950,000 761 99
23 NICON GARDENS 2,013 908,000 451 99
27 EUPHONY GARDENS 1,184 780,000 659 99
5 ONE-NORTH RESIDENCES 592 980,000 1,655 99
9 LEONIE STUDIO 689 1,300,000 1,887 99
20 CLOVER BY THE PARK 1,292 1,268,000 982 99
17 BLUWATERS 2 1,206 1,280,000 1,062 946
12 BALESTIER PLAZA 1,001 900,000 899 FH
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